Mark Latham Commodity Equity Intelligence Service

Wednesday 26th October 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Satellite company claims 1/3 Earth's surface now covered every day.

    http://qz.com/816126/a-startups-constellation-of-tiny-satellites-is-now-photographing-a-third-of-earths-landmass-every-day/

    Are you ready for the coming era of global transparency?

    After two years in operation, the satellite-imaging startup Planet tells Quartz that it is now photographing more than 50 million square kilometers of the earth every single day. That’s about a tenth of the world’s surface area, or more than a third of its 149 million square kilometers of land. Indeed, in September 2016 alone, the company says it imaged 91% of earth’s land mass.



    We have old mental models for the state of the world,” Schingler said. “The world is increasingly dynamic, and a lot of that is happening without people knowing about it.”

    The technology currently used to gather these images are large, expensive satellites flying 600 kilometers or more above the earth. Their operators typically target these satellites on specific areas requested by their clients. But these satellites can’t be everywhere at once, and competition over satellite capacity drives up the cost of using them. This is further compounded by the fact there is only so much cloud-free daylight over earth for imaging.


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    Caterpillar Warns Of

    Image title
    As we previewed yesterday when we showed that for 46 consecutive months industrial bellwether Caterpillar has failed to post a retail sales increase...

     

    ... it should probably not come as a surprise that moments ago CAT not only badly missed revenues, reporting $9.2 billion well below the $9.80 billion expected (courtesy of the usual non-GAAP fudging, CAT managed to "boost" its EPS enough to beat estimates, reporting adjusted earnings of $0.85, above the $0.76 consensus), but it also once again slashed full year guidance, now expecting revenue of $39 billion, and EPS of $3.25 per share excluding restructuring costs, down from the guidance of $40.0 to $40.5 billion and EPS of $3.55 provided just three months ago.

    But it was outgoing CEO Doug Oberhelman's commentary in the release that was more troubling, to wit:

    "Economic weakness throughout much of the world persists and, as a result, most of our end markets remain challenged.  In North America, the market has an abundance of used construction equipment, rail customers have a substantial number of idle locomotives, and around the world there are a significant number of idle mining trucks."

    "While we are seeing early signals of improvement in some areas, we continue to face a number of challenges.  We remain cautious as we look ahead to 2017, but are hopeful as the year unfolds we will begin to see more positive momentum.  Whether or not that happens, we are continuing to prepare for a better future.  In addition to substantial restructuring and significant cost reduction actions, we've kept our focus on customers and on the future by continuing to invest in our digital capabilities, connecting assets and jobsites and developing the next generation of more productive and efficient products"... "Many of our businesses, including mining, oil and gas, rail and construction, are currently operating well below historical replacement demand levels in many parts of the world."

    That said, it was not all gloom:

    "there were a few bright spots this quarter.  Both the construction industry and our machine market position improved in China.  Most commodity prices, while low, seem to have stabilized.  Parts sales have increased sequentially in each of the last two quarters.  Our machine market position and quality remain at high levels and our work on Lean and restructuring are continuing to help us lower costs.

    Caterpillar’s results are closely followed by investors as the company is viewed as a bellwether of global construction and manufacturing activity.

    In pre-market trading, shares of the company were down about 2%. Year-to-date, the stock is up about 25%.

    http://www.zerohedge.com/news/2016-10-25/caterpillar-warns-economic-weakness-throughout-much-world-cuts-guidance

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    Anglo American rallies again, output guidance broadly unchanged


    Anglo American on Tuesday left output guidance broadly unchanged for most of its commodities, adding market conditions had improved for its diamond business, while it trimmed full-year production expectations for coking coal exports.

    Chief Executive Mark Cutifani said in a statement operational improvements were continuing across the portfolio.

    Analysts also said the results were solid and Anglo American's share price gained another 3.8 percent by 0748 GMT, adding to a leap of well over 250 percent this year.

    The gains have been fuelled by a rally in commodities, notably coal.

    Coking coal prices have risen by more than 200 percent, meaning even small changes in output can impact profits and prices.

    Anglo American has estimated a $10 per tonne price increase in coking coal creates a $142 million change in pre-tax earnings, while for thermal coal the same increase leads to an extra $54-to-$200 million depending on the region.

    Anglo American lowered full-year production guidance for export metallurgical coal to 20.5-21.5 million tonnes from 21-22 million following the completion of the Foxleigh sale in Australia at the end of August.

    Full-year production guidance for export thermal coal from South Africa and Colombia was unchanged at 28-30 million tonnes.

    Anglo American has said it is focusing on high value core commodities, including platinum group minerals, copper and diamonds.

    For its De Beers diamond unit, it said market conditions had improved after a difficult 2015 and output had been increased by 4 percent to 6.3 million carats compared with the third quarter a year ago.

    Rough diamond sales increased by 77 percent in the third quarter to 5.3 million carats.

    Full-year production guidance remains unchanged at 26-28 million carats, subject to trading conditions.

    For copper and platinum, it also said overall guidance was unchanged.

    Production from Los Bronces in Chile decreased by 27 percent to 72,100 tonnes due to expected lower grades and in part because of a strike, but it reaffirmed its previous full-year guidance of 570,000 to 600,000 tonnes.

    Paul Gait, analyst at Bernstein, which rates Anglo American outperform, said the results were solid and Anglo was "putting to rest" issues, such as high levels of debt that a year ago rocked the sector.

    http://www.reuters.com/article/anglo-american-outlook-idUSL8N1CV1F3?feedType=RSS&feedName=basicMaterialsSector&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+MasterMetalsNews+%28MasterMetals+News+Feed%29&utm_term=MasterMetals
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    Oil and Gas

    Why China Is Being Flooded With Oil: Billions In Underwater OPEC Loans Repayable In Crude


    When the price of oil was above $100, many of the less developed oil exporting OPEC members decided to capitalize on the high price and cash out by taking loans using the precious liquid as collateral very much the same way corporate CEOs use their inflated stock (thanks to buybacks they authorize) to issue loans against said stock. And why not: even if the price of oil were to drop, they could just pump more until the principal is repaid. However, few oil exporters anticipated such an acute oil plunge in such as short time span, which resulted in the value of the collateral tumbling by 70%, and now find themselves have to repay the original loan by remitting as much as three times more oil!

    According to Reuters, this is precisely what happened in the years preceding the great 2014-2015 oil bust: "poorer oil-producing countries which took out loans to be repaid in oil when the price was higher are having to send three times as much to respect repayment schedules now prices have fallen."

    As a result, the finances of countries such as Angola, Venezuela, Nigeria and Iraq have been crippled, in the process creating further division within the Organization of the Petroleum Exporting Countries.

    But while these already poor and corrupt OPEC nations were the biggest losers, one country was a huge winner, the country that provided the billions in virtually risk-free, oil-collateralized loans to any country that requested them. China. The same China which has once again proven smart enough to not demand repayment in fiat but in physical commodities, be they oil, copper or gold.

    Take Angola for example: Africa's largest oil producer has borrowed as much as $25 billion from China since 2010, including about $5 billion last December, which according to Reuters forced its state oil firm to channel almost its entire oil output toward debt repayments this year.

    Or Venezuela: ever since 2007, China, which has become Venezuela's top financier via an oil-for-loans program, has funneled an amazing $50 billion into the Chavez first and then Maduro regimes, in exchange for repayment in crude and fuel, including a $5 billion deal last September.  While details of the loans have not been made public, analysts from Barclays estimate Caracas owes $7 billion to Beijing this year and needs nearly 800,000 bpd to meet payments, up from 230,000 bpd when oil traded at $100 per barrel.

    Ecuador, one of OPEC's smallest member countries, borrowed up to $8 billion from Chinese and Thai firms, repayable with oil, between 2009 and 2015, according to the national oil company

    Many other countries have borrowed money from China (and others such as producers Exxon, Shell and Lukoil, as well as traders Vitol and Trafigura) and promised to repay in oil included Nigeria, Iraq, Venezuela and others.

    Fast forward to today when Angola, Nigeria, Iraq, Venezuela and Kurdistan are due to repay a total of between $30 billion and $50 billion with oil, Reuters calculates. Repaying $50 billion required only slightly over 1 million barrels per day (bpd) of oil exports when it was trading at $120 per barrel but with prices of around $40, the same repayment would require exports of over 3 million bpd.

    This is terrible news for all the indebted exporters because not only do they now have to pump three times as much just to repay the same loan, they have little if anything left over to fund critical budget needs and certainly nothing left over to invest.

    "All of those oil nations – Angola, Nigeria, Venezuela – have taken money for survival but haven't got any money left for investments. That is very damaging to their long-term growth prospects," said Amrita Sen from Energy Aspects think-tank. "People tend to look at current production volumes but if you have committed your entire production to China or other buyers under loans – then you cannot invest to keep growing and won't benefit from higher prices in the future."

    While the poorer OPEC exporters find themselves pumping unprecedented amount just to stay afloat, the rich OPEC producers have understandably stayed away from debt: according to Reuters, OPEC's Gulf Arab members - Saudi Arabia, the United Arab Emirates, Kuwait and Qatar - have very few joint ventures with oil companies, do not have pre-payment deals with China and do not need to borrow from trading houses.

    And so, while Saudi Arabia saw every dollar from its oil sales going to state coffers, the poorer members had a large part of their oil revenue eaten up by debts - read China - leaving no money to invest in infrastructure and field development. As a result, Nigeria and Venezuela are now facing steep production declines at a time when Saudi Arabia is preparing to further ramp up supplies as it invested heavily in new fields.

    http://www.zerohedge.com/news/2016-05-24/why-china-being-flooded-oil-billions-underwater-opec-loans-repayable-crude
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    Libyan oil exports have more than doubled this month


    Libyan oil exports have more than doubled this month, currently at 432,000 bpd, with a wider variety of crude grades being exported.

    @ClipperData
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    Iraq offers oilfields under new contract terms


    Moving away from the service-based contracts it agreed for its giant fields, Iraq's oil ministry has launched a new round of bidding to develop 12 small to medium-sized oilfields and will directly negotiate terms with oil companies.

    The 12 fields now on offer are located in three provinces including four in Basra, five in Maysan and three in the Central province, according to a tender document on the ministry's website.

    The ministry pre-qualified 19 companies for the round including six Japanese firms, the UAE's Dragon Oil, Mubadala Petroleum, and Crescent Petroleum, Glencore Exploration Ltd, as well as firms from China, Russia, Italy, Kuwait, Indonesia, Vietnam, Thailand and Romania.

    Companies that have not been pre-qualified may also participate in the tendering after paying a $15,000 fee and submitting proof of their technical and financial capabilities.

    The new invitation to tender allows oil companies to ‘submit their own proposals for contractual, commercial and financial terms and conditions’, a clear shift from the service contracts used for the country's giant southern fields.

    The ministry will hold direct negotiations with individual IOCs or consortia and use those talks as the basis for awarding development and production contracts for the fields.

    Under the service contracts used for Baghdad's post-2003 bidding rounds including those for its giant southern fields like Rumaila, West Qurna 1 and 2 and Majnoun, the ministry pays IOCs a fixed dollar-denominated fee every barrel of oil produced.

    While the model worked well for Baghdad when oil prices were high the slump in prices over the past two years left Baghdad paying the same fees to firms like BP, Exxon, Lukoil and Shell at a time when revenue from oil sales was significantly lower.

    The oil ministry has repeatedly said it wishes to renegotiate the terms of its service contracts with IOCs to link fees they receive for developing its fields to oil prices and have them share the burden when markets go down.

    A data package costing $50,000 is available for purchase from the oil ministry.

    http://www.arabianoilandgas.com/article-16288-iraq-offers-oilfields-under-new-contract-terms/

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    India: Torrent Power issues tender seeking 38 LNG cargoes


    Indian power company, Torrent Power, launched a tender seeking the supply of a total of 38 LNG cargoes for delivery from 2017 to 2021.  

    According to the company’s tender document, the supply term is divided into three periods with the first one starting in April 2017 and lasting until December 2019.

    During the first period, Torrent Power is looking for the supply of 22 cargoes, with eight cargoes to be delivered in the two following supply windows.

    The second period starts in January 2020 until December the same year with the last supply period starting in January 2021 until December 2021.

    Torrent Power is looking for cargoes in volumes between 125,000-cbm and 175,000-cbm, on delivered ex-ship (DES) basis to Petronet’s Dahej LNG terminal where the power utility reserved storage and regasification capacity from April 2017 onwards.

    Bidders are invited to submit offers with fixed prices, brent-linked prices or a mix of the both options.

    Tender documents show that the deadline for bid submissions is November 14.

    http://www.lngworldnews.com/india-torrent-power-issues-tender-seeking-38-lng-cargoes/
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    Online trading aims to break up LNG 'club'


    The founder of the world's first online trading platform for liquefied natural gas says "the time is right" to break up the cosy club of producers and buyers in the commodity, where a single cargo can be worth up to $US30 million.

    The GLX global exchange, formally launched in Singapore on Tuesday, means sellers can be satisfied they are securing fair market prices for their spot cargoes, rather than relying on the strength of their relationships and market intelligence, said Damien Criddle, the founder and one of the Australian developers of the venture.

    The oversupply dogging the LNG market, expected to last until early next decade, and the growing numbers of buyers and sellers have opened up an opportunity for the introduction of the platform, said Mr Criddle.

    The exchange, funded by high net worth backers including the Criddle family, which founded miner Decmil Group, will facilitate auctions of LNG cargoes on behalf of buyers and sellers worldwide and is also expected to support the emergence of transparent price benchmarks for the commodity.

    "The LNG market is in a state of flux and change," Mr Criddle said from Singapore. "This is the right time for this initiative to be put to the market."

    He said global LNG producers, buyers and traders were all among those parties trialling the system, with a view to starting live trading in the March quarter next year. As an incentive to encourage participants, GLX is waiving fees for trading participants for the first 12 months.

    GLX, which is chaired by former Woodside senior executive Rob Cole, will run the LNG trading platform from Singapore, which has emerged as a leading LNG trading market in Asia, the biggest import region for LNG. Auctions will be carried out based on either Singapore or London time, with reserve prices set, and invited counterparties. Once an auction is successfully completed, a binding sales contract results.

    The expansion of the LNG market over the past few years means some 75 sellers and 75 buyers are involved worldwide in trading, with no efficient way until now to bring the market together, according to Mr Criddle. Most cargoes have been traded, therefore, on a bilateral basis between parties with existing relationships.

    About 1200 cargoes a year are now traded through short-term sales, representing almost 30 per cent of the market, according to GLX. With each cargo worth $US20 million-$US30 million, the short-term market is worth up to $US36 billion a year, even at current depressed prices.

    Mr Cole, a former chief executive of Beach Energy who resigned for personal reasons last year, said the platform had been developed with close consultation with industry and governments and was "deliberately unaligned" with any market or regional interests.

    "We have sought to create a truly independent platform which serves the interests of all participants, which is a market operating on demand and supply fundamentals and based on fair and transparent pricing," Mr Cole said.

    He said the time had come for the LNG industry to embrace online platforms in the way that other globally traded commodities such as coal and iron ore have.



    Read more: http://www.afr.com/business/energy/gas/online-trading-to-break-up-lng-club-20161025-gs9vls#ixzz4O6iOVv7U
    Follow us: @FinancialReview on Twitter | financialreview on Facebook

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    Japan utilities use 8.7 pct more LNG in July than June for power


    Japanese power companies consumed 4.68 million tonnes of liquefied natural gas (LNG) for power generation in July, up 8.7 percent from the previous month, data
    from the Ministry of Economy, Trade and Industry showed.

    The power companies also consumed 10.04 million tonnes of thermal coal in July, up 23.2 percent from June, while their crude oil consumption rose 27.2 percent from the previous month to 274,752 kilolitres (55,746 barrels per day), the preliminary
    data for June released on Friday showed.

    The utilities generated 79.3 billion kilowatt-hours of electricity in July, the data showed.

    The group of 10 former power monopolies, which started publishing monthly data in 1972, stopped compiling power output and demand numbers in April to ensure fair competition after the liberalisation of retail power market.

    That left the trade ministry's monthly data as the only official data gauging the power statistics.

    http://af.reuters.com/article/energyOilNews/idAFL4N1CV25O
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    Baker Hughes announces third quarter 2016 results; revenue falls to $2.4 billion


    * Revenue of $2.4 billion for the quarter, down 2% sequentially and 38% year-over-year
    * Operating losses were $321 million for the quarter, a sequential improvement of $249 million, or 44%
    * GAAP net loss per share of $1.00 for the quarter includes $0.85 per share of adjusting items
    * Cash flows from operating activities were $119 million for the quarter

    North America

    North America revenue of $674 million for the quarter increased 1% sequentially. The activity increase in the U.S. onshore and the seasonal uplift in Canada were almost entirely offset by a steep decline in activity in the Gulf of Mexico. Despite the increase in activity, the competitive landscape remains challenging across the entire segment.

    Operating loss before tax for the third quarter was $65 million, a $246 million improvement compared to the prior quarter. The reduced losses were driven primarily by $158 million of inventory-related adjustments in the prior quarter not repeating, cost savings from recent restructuring actions, including lower depreciation and amortization expense from impairments, and a reduced provision for excess inventory. The current quarter also includes a $28 million benefit from non-recurring items.

    Adjusted operating loss before tax (a non-GAAP measure), which excludes the inventory-related adjustments, was $74 million for the third quarter, a $79 million improvement compared to the $153 million in the prior quarter.

    Latin America

    Latin America revenue of $243 million increased 3% sequentially against the backdrop of a 2% rig count reduction. The increase in revenue was driven mainly by a one-time product sale in the Andean area, partially offset by reduced activity in the region, primarily in Venezuela and Mexico.

    Operating profit before tax for the third quarter was $20 million, an increase of $263 million, compared to an operating loss before tax of $243 million in the prior quarter. The improvement in profitability is driven by $130 million of provisions for doubtful accounts and $88 million of inventory adjustments in the prior quarter not repeating, lower provision for excess inventory, and cost savings from restructuring actions, including reduced depreciation from impairments. The current quarter also includes a high-margin, one-time product sale in the Andean area and a $3 million benefit from non-recurring items.

    Adjusted operating profit before tax (a non-GAAP measure), which excludes the inventory adjustments, was $16 million for the third quarter, a $171 million increase compared to the $155 million operating loss before tax in the prior quarter.

    Europe/Africa/Russia Caspian

    Europe/Africa/Russia Caspian revenue of $519 million for the quarter decreased 11% sequentially, primarily due to reduced activity and unfavorable exchange rates in West Africa and reduced activity in Norway, mainly as a result of project timing and labor union strikes.

    Operating profit before tax for the third quarter was $22 million, an increase of $279 million compared to an operating loss before tax of $257 million in the prior quarter. Despite lower revenue, profitability improved sequentially, mainly as a result of $152 million of inventory adjustments and $58 million of valuation allowances on indirect taxes and provisions for doubtful accounts in the second quarter not repeating. The current quarter also includes cost savings from restructuring actions, including reduced depreciation and amortization expense, lower provision for excess inventory, and a $5 million benefit from non-recurring items.

    Adjusted operating profit before tax (a non-GAAP measure), which excludes the inventory adjustments, was $13 million for the third quarter, a $118 million increase compared to the $105 million operating loss before tax in the prior quarter.

    Middle East/Asia Pacific

    Middle East/Asia Pacific revenue of $649 million for the quarter was relatively flat sequentially. Activity declines and price erosion across most of the segment were offset by pockets of activity growth, primarily in Saudi Arabia and Kuwait.

    Operating profit before tax for the third quarter was $71 million, an increase in profitability of $213 million compared to operating loss before tax of $142 million in the prior quarter. Despite price deterioration, profitability improved as a result of $125 million of inventory adjustments in the prior quarter not repeating, cost savings from restructuring actions, including reduced depreciation and amortization expense, lower provision for excess inventory, and a $6 million benefit from non-recurring items.

    Adjusted operating profit before tax (a non-GAAP measure), which excludes the inventory adjustments, was $63 million for the third quarter, an increase in profitability of $80 million compared to adjusted operating loss before tax of $17 million in the prior quarter.

    Industrial Services

    Industrial Services revenue of $268 million for the quarter decreased 2% sequentially. The decrease in revenue was mainly related to project delays in the pipeline inspection and maintenance business, causing an earlier-than-usual seasonal decline.

    Operating profit before tax for the third quarter was $30 million, an increase of $73 million compared to operating loss before tax of $43 million in the prior quarter. The increase in profitability was driven by $47 million of inventory adjustments and $7 million of provisions for doubtful accounts in the second quarter not repeating. The current quarter also includes cost savings from restructuring actions, including reduced depreciation and amortization expense, lower provision for excess inventory, and a $3 million benefit from non-recurring items.

    Adjusted operating profit before tax (a non-GAAP measure), which excludes the inventory adjustments, was $26 million, an improvement of $22 million compared to $4 million in the prior quarter.

    http://www.oilvoice.com/n/Baker-Hughes-announces-third-quarter-2016-results-revenue-falls-to-24-billion/b9bd57f66cf1.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

    BHI says 100 rigs have been added in Russia in past year
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    BP, Shell Help Lift Profitability of Oil Trading to 6-Year High


    The trading arms of Royal Dutch Shell Plc and BP Plc enjoyed their best year ever in 2015, helping push the combined gross margins of oil merchants to a six-year high, according to a closely watched report.

    Oil traders last year “stormed ahead, thanks to low, volatile spot prices that created cash-and-carry opportunities,” consultancy Oliver Wyman said in its annual review of the commodities-trading industry published Wednesday.

    These oil traders’ gross margins -- a rough measure of profitability -- rose to a combined $19 billion, the highest since 2009, when traders thrived off of big price swings and oversupplied markets. For commodities traders in general, total gross margins stagnated at $44 billion for the second consecutive year as natural gas, power and other markets underperformed oil.

    The Oliver Wyman report is closely watched in the commodities industry as several of the world’s top traders, including units of major oil companies such as Shell, BP and Total SA, don’t disclose their profitability. Shell and BP have said they had a very strong year in 2015.

    Independent energy traders including Vitol Group and rivals Trafigura Group Pte, Glencore Plc, Gunvor Group Ltd. and Mercuria Energy Group Ltd. profited last year from the increase in volatility as oil prices plunged below $50 a barrel, from $100 in mid-2014.

    Contango Opportunity

    The oil traders filled tanks to take advantage of contango -- a relatively rare situation where contracts for future delivery are trading higher than spot prices, allowing them to buy oil cheap, store it and sell the commodity at a profit later by locking in their income through derivatives.

    Oliver Wyman noted that profitability also increased last year as the top independent traders boosted volumes to an average of 4 million barrels per day each, while the trading arms of oil majors handled between 5 million and 10 million barrels a day each.

    The trading conditions have since changed, with contango narrowing and even disappearing in some markets and volatility dropping.

    The report, co-authored by Graham Sharp, one of the founders of top trading house Trafigura, warned that the number of commodities trading houses will “shrink” in the next few years as competition increases and margins continue to drop.

    Artificial Intelligence

    The commodity-trading industry is about to undergo major changes in how it uses technology to manage shipments, the consultancy said in the report, adding that “digital contenders” will exploit advances including artificial intelligence to automate processes.

    “Managing fleets of vessels, optimizing credit risk, aggregating internal and external intelligence on cash flows, and even making freight decisions accounting for cargo flows in relation to the market, weather, congestion, and other factors will soon all be assisted by machines as often as by man,” Oliver Wyman said. “Vastly fewer people will be required, compared to today’s standards, because artificially intelligent systems will manage the bulk of volume.”

    http://www.bloomberg.com/news/articles/2016-10-26/bp-shell-help-lift-profitability-of-oil-trading-to-6-year-high

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    Weatherford International reported $1.78 billion loss, completes job cuts


    Weatherford International, which has its main operations in Houston,  posted a $1.8 billion net loss for the third quarter, even though its North American revenues slowly began to rise from the previous three months.

    Weatherford laid off  several hundred workers in  in the third quarter to complete at least 8,000 job cuts through the first nine months of the year.

    About $1.4 billion of the oilfield services company’s losses come through the write downs on the lost values of rigs, equipment and other assets, as well as other tax charges.

    Weatherford’s net loss compares to a $170 million loss during the same time last year, as well as a $565 million loss in the second quarter of this year.

    Weatherford’s $1.35 billion in revenues are down almost 40 percent from last year, but just down 3 percent from the second quarter. The company’s North American revenues actually grew 12 percent from the previous quarter.

    http://fuelfix.com/blog/2016/10/25/weatherford-international-reported-1-78-billion-loss-completes-job-cuts/
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    Buckeye to buy stake in Vitol’s terminal business for $1.2 billion


    Oil-storage firm Buckeye Partners plans to pay $1.15 billion for part of Vitol’s international oil terminal business, the companies said Monday.

    The transaction, slated to close in January, would give the Houston energy company 50-percent ownership of VTTI B.V., owned by oil-trading house Vitol, which is based in the Netherlands. Vitol’s 13 terminals hold roughly 54 million barrels of oil and other products made from oil.

    Buckeye and Vitol said they’ll have the same number of directors on the jointly-owned company’s board. In a written statement, Buckeye CEO Clark Smith said the deal gives the company a springboard to “further attractive growth opportunities across the globe.”

    He pointed to the marine terminals “strategic” locations in places such as Northwest Europe, the United Arab Emirates and Singapore.

    The 120 petroleum products terminals Buckeye already owns hold some 110 million barrels.

    http://fuelfix.com/blog/2016/10/24/buckeye-to-buy-stake-in-vitols-terminal-business-for-1-2-billion/

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    LUKOIL begins commercial production at Pyakyakhinskoye field


    LUKOIL started today commercial production at the Pyakyakhinskoye oil and gas condensate field in the Yamal-Nenets Autononous District. The official ceremony was attended by Deputy Prime Minister of the Russian Federation Arkady Dvorkovich, President of LUKOIL Vagit Alekperov and Governor of the Yamal-Nenets Autonomous District Dmitry Kobylkin. The event is a milestone for both the Company and the Russian oil and gas industry.

    The active construction and development phase at the Pyakyakhinskoye field started in 2014. A gas-turbine electric power plant with a capacity of 36 MW and a number of production, social and environmental facilities have been built at the field to date, including an oil treatment unit, a pump station of the pressure-maintenance system, a condensate de-ethanization and stabilization unit, a transfer-and-acceptance station, a gas treatment unit, a refuse dump for household and industrial waste, and a field camp for 300 people.

    One hundred and seven (107) wells have been drilled at the field, including 72 oil wells and 31 gas wells. Thirty-six (36) oil wells are currently in production, with an overall daily flow rate exceeding 3,000 tons (20,000 barrels). The crude oil is transported via the Zapolyarye-Purpe pipeline.

    The launch of gas production at the field is planned for the latter part of 2016. Marketable gas from the field will be transported via a trunk pipeline to a gas-compressor station near the Nakhodkinskoye field and farther on to the Yamburgskaya gas-compressor station.

    The field is planned to produce 1.5 million tons of crude oil and gas condensate and 3 billion cubic meters of natural gas in 2017.

    http://www.oilvoice.com/n/LUKOIL-begins-commercial-production-at-Pyakyakhinskoye-field/98f025c189c7.aspx
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    Total, Glencore and Gunvor bidding for Chevron's South African assets


    Total, Glencore and Gunvor are bidding for a 75 percent stake in Chevron's South African downstream assets, which include a refinery, three industry sources told Reuters on Tuesday.

    U.S. oil major Chevron said in January it planned to sell 75 percent of its South African business unit, which includes a 110,000-barrels-a-day refinery in Cape Town.

    The second bidding round in which actual offers were made closed on Sept. 30, the sources said, with a selling price estimated at $1 billion expected for the assets in South Africa as well as neighboring Botswana.

    "Total, Glencore and Gunvor have bid for the assets," said one industry source close to the matter.

    A second source with knowledge of the transaction said: "These companies comprise the front-runners for the bid. We might possibly get a (preferred bidder) decision by the first quarter of next year."

    French oil major Total, crude oil trader Gunvor and Glencore, a mining and trading company, declined to comment.

    Chevron spokesman Braden Reddall said in an emailed response that the bidding process was continuing and "as a matter of policy, we do not disclose details of commercial activities".

    Financial advisor Rothschild & Co is helping Chevron on the sale, which has also seen interest from Sasol, the world's largest gas-to-fuel producer, which said in July it was considering buying the majority stake.

    Chevron is a leading refiner and marketer of petroleum products in South Africa, the most industrialized country in Africa, where it has had a presence for more than a century.

    Besides the Cape Town refinery, Chevron also has interests in a lubricants plant in Durban on the east coast. Its network of Caltex service stations makes it one of South Africa's top five petroleum brands, according to its website.

    http://www.reuters.com/article/us-safrica-chevron-idUSKCN12P0VL

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    Niger Delta Avengers; ESCRAVOS EXPORT PIPELNE DOWN


    Today at about 3:45am our strike team 06 took down Chevron Escravos export pipeline at Escravos offshore. This action is to further warn all IOCs’ that when we warn that there should be no repairs pending negotiation/dialogue with the people of the Niger Delta, it means there should be no repairs. Ant attempt to use dialogue to distract us so as to allow the free flow of our oil will halt the dialogue process.

    Brig.Gen Mudoch Agbinibo
    Spokesperson

    http://www.nigerdeltaavengers.org/2016/10/escravos-export-pipelne-down.html

    Nigeria's oil production has risen to 1.9 mil b/d, oil ministry said Tuesday. Capacity at 2.4 mil b/d
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    API Reports Larger Than Expected Inventory Build of 4.8 Million Barrels


    The latest weekly American Petroleum Institute (API) data recorded an inventory build of 4.8mn barrels. This followed a 3.8mn draw the previous week. Markets were expecting a smaller build of around 1.5mn barrels, although estimates of the likely build had been gradually increasing ahead of the data release.

    The build will tend to maintain a more fragile tone in crude given concerns that the run of inventory drawdowns is coming to a close, although maintenance schedules are liable to distort the data in the short term.

    There was another sharp draw in Cushing stocks of 2.3mn barrels due to a continuing impact from the outage of a key pipeline into the storage facility.

    Gasoline inventories recorded a build of 1.7mn barrels in the week while distillate recorded a third successive weekly draw, this time of 0.9m barrels.

    There will be some disappointment in the gasoline data, with a series of builds in October after a sharp decline in stocks during September, lessening confidence that fuel inventories are being brought under control.

    There was high volatility in crude during Tuesday as recent choppy trading conditions persisted. WTI pushed to highs around $50.80 p/b early in the US session before sliding to lows below $50.00 later in the New York session.

    The movements in oil prices tended to be correlated positively with the dollar trends during the day, with oil sliding at the same time as the US currency was subjected to heavy profit taking.

    Crude was undermined by reported comments from Russian officials that the government would not be willing to consider a production cut. Wider uncertainty surrounding the OPEC production cuts also triggered a fresh round of selling while markets were also braced for a rise in inventories.

    From levels around $49.80 ahead of the data, WTI immediately moved sharply lower to below $49.50 before attempting to stabilise around this level, although losses subsequently extended to $49.35.

    The Energy Information Administration (EIA) data will again be important on Wednesday with high volatility likely to be a key feature. Levels of fuel inventories data will be watched closely and the US production levels will also be important given expectations that the increase in drilling rigs will help trigger a rebound in US output.

    http://www.economiccalendar.com/2016/10/25/api-reports-larger-than-expected-inventory-build-wti-oil-prices-retreat/
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    Texas wildcatter eyes IPO after previous company exits bankruptcy


    Upstart oil company Energy Hunter Resources Inc said on Tuesday it plans to hold an initial public offering in November, only six months after founder Gary Evans left as chief executive of his previous company when it exited bankruptcy.

    If the IPO is successful, it will serve as a testament to the openness of capital markets in what has been a roller coaster ride for shale oil companies since mid-2014, when OPEC's refusal to curb production caused the worst oil price crash in a generation.

    During the downturn, scores of U.S. independent oil companies fueled the biggest wave of bankruptcies since the telecom meltdown of the early 2000s.

    But this year, oil prices have nearly doubled to $50 a barrel, allowing for equity markets to set records for secondary stock issuances by energy companies.

    "The markets have definitely gotten stronger than I anticipated and that has to do with a change in market sentiment about commodities prices," Evans told Reuters on Tuesday after investor presentations in New York.

    Energy Hunter Resources said earlier on Tuesday it has filed for the IPO with the U.S. Securities and Exchange Commission under what is essentially a fast-track process for startups.

    The IPO would be the third for Evans, an oilfield wildcatter known for his entrepreneurial streak and penchant for big-game hunting. His previous company, Magnum Hunter Resources, bet heavily on natural gas fields before prices sank.

    Energy Hunter would tap the public markets before Thanksgiving to add to its still small land holdings in Texas, and issue stock again next year to raise more funds, Evans said.

    It would be the second oil and gas IPO since OPEC said in September it would restrict output for the first time in more than two years, a move that effectively put a floor on prices.

    On Oct. 12, Denver-based Extraction Oil & Gas Inc became the first producer to launch a U.S. IPO this year in a raising that valued the company at about $3.23 billion.

    "What OPEC accomplished - they regained market share (from other producers around the world.) They hurt U.S. industry, but we are coming back. They didn't think we could make this work at $50 oil. But we did it, and so now you are seeing Wall Street embrace this," Evans said.

    http://www.reuters.com/article/us-energyhunter-ipo-idUSKCN12P2TX
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    Lawyers Warn Pipeline Case May Turn Midstreamers “On Their Heads”


    A couple of legal beagles from the Fox Rothschild law firm (in NJ) are sounding the alarm that two bankruptcy court decisions in New York State are threatening to up-end the midstream industry across the country. We tend to agree with them.

    Earlier this year, MDN brought you the news that a NY bankrutpcy court judge had allowed Sabine Oil & Gas, going through bankruptcy, to cancel a pipeline gathering contract with Cheniere’s Nordheim Eagle Ford Gathering in Texas.

    Nordheim spent $84 million building a pipeline system to Sabine’s wells. In return for laying out that kind of money, Sabine, as is always the case, signed a multi-year contract with Nordheim (10 years in this case), ensuring Nordheim would make make a profit on its up-front investment.

    The judge allowed Sabine to carte blanche cancel the deal several years into the contract. We asked at the time: If a driller signs a contract and that signature is no longer any good, will anyone build pipeline systems anymore?

    A pair of lawyers delve into the case and point out: “If other judges follow the analysis and conclusions reached in the Sabine Oil case, the expectations of midstream service providers in the oil and gas extraction process might be turned on their heads.” Indeed…

    http://marcellusdrilling.com/2016/10/lawyers-warn-pipeline-case-may-turn-midstreamers-on-their-heads/
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    Alternative Energy

    IEA raises its five-year renewable growth forecast as 2015 marks record year


    The International Energy Agency said today that it was significantly increasing its five-year growth forecast for renewables thanks to strong policy support in key countries and sharp cost reductions. Renewables have surpassed coal last year to become the largest source of installed power capacity in the world.

    The latest edition of the IEA’s Medium-Term Renewable Market Report now sees renewables growing 13% more between 2015 and 2021 than it did in last year’s forecast, due mostly to stronger policy backing in the United States, China, India and Mexico. Over the forecast period, costs are expected to drop by a quarter in solar PV and 15 percent for onshore wind.

    Last year marked a turning point for renewables. Led by wind and solar, renewables represented more than half the new power capacity around the world, reaching a record 153 Gigawatt (GW), 15% more than the previous year. Most of these gains were driven by record-level wind additions of 66 GW and solar PV additions of 49 GW.  

    About half a million solar panels were installed every day around the world last year. In China, which accounted for about half the wind additions and 40% of all renewable capacity increases, two wind turbines were installed every hour in 2015.

    “We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the center of gravity for renewable growth is moving to emerging markets,” said Dr Fatih Birol, the IEA’s executive director.

    ‌There are many factors behind this remarkable achievement: more competition, enhanced policy support in key markets, and technology improvements. While climate change mitigation is a powerful driver for renewables, it is not the only one. In many countries, cutting deadly air pollution and diversifying energy supplies to improve energy security play an equally strong role in growing low-carbon energy sources, especially in emerging Asia.

    Over the next five years, renewables will remain the fastest-growing source of electricity generation, with their share growing to 28% in 2021 from 23% in 2015.

    Renewables are expected to cover more than 60% of the increase in world electricity generation over the medium term, rapidly closing the gap with coal. Generation from renewables is expected to exceed 7600 TWh by 2021 -- equivalent to the total electricity generation of the United States and the European Union put together today.

    But while 2015 was an exceptional year, there are still grounds for caution. Policy uncertainty persists in too many countries, slowing down the pace of investments. Rapid progress in variable renewables such as wind and solar PV is also exacerbating system integration issues in a number of markets; and the cost of financing remains a barrier in many developing countries. And finally, progress in renewable growth in the heat and transport sectors remains slow and needs significantly stronger policy efforts.

    The IEA also sees a two-speed world for renewable electricity over the next five years. While Asia takes the lead in renewable growth, this only covers a portion of the region’s fast-paced rise in electricity demand. China alone is responsible for 40% of global renewable power growth, but that represents only half of the country’s electricity demand increase.

    This is in sharp contrast with the European Union, Japan and the United States where additional renewable generation will outpace electricity demand growth between 2015 and 2021.

    The IEA report identifies a number of policy and market frameworks that would boost renewable capacity growth by almost 30% in the next five years, leading to an annual market of around 200 GW by 2020. This accelerated growth would put the world on a firmer path to meeting long-term climate goals.

    “I am pleased to see that last year was one of records for renewables and that our projections for growth over the next five years are more optimistic,” said Dr. Birol. “However, even these higher expectations remain modest compared with the huge untapped potential of renewables. The IEA will be working with governments around the world to maximize the deployment of renewables in coming years.”

    http://www.iea.org/newsroom/news/2016/october/iea-raises-its-five-year-renewable-growth-forecast-as-2015-marks-record-year.html?utm_content=bufferb8516&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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    Lenders rescue rare earths producer Lynas from collapse


    Japanese lenders and a hedge fund have struck a deal to save Australia's Lynas Corp, the only rare earths producer outside China, from collapse, cutting its interest costs and giving it nearly four years breathing room to pay off its debt.

    State-owned Japan Oil, Gas and Metals National Corp (JOGMEC) and Sojitz Corp are eager to ensure a supply of rare earths from outside China, the world's biggest producer of the elements crucial for smart phones, computers and cars.

    Loss-making Lynas urged shareholders on Wednesday to approve the debt restructure, even though their stakes could shrink as the deal allows New York-based hedge fund Mount Kellett to buy more shares in the company and sets a lower price for converting its bonds to equity.

    "Notwithstanding the potential for dilution, Lynas Directors have concluded that approval of the proposed amendments is important to assist the continued operation of the Lynas business as a going concern," the company said in a statement to the Australian stock exchange.

    Lynas shares jumped as much as 17 percent after the announcement to a one-month high at 6.2 cents a share. The company peaked at A$2.70 a share in 2011 when rare earths prices rocketed following a Chinese curb on exports.

    Under the deal, Lynas will not have to make any fixed repayments on the $203 million it still owes to Sojitz and JOGMEC until 2020. It previously faced staged repayments up to 2018.

    The Japanese, eager to ensure that Lynas stays viable following the collapse of the only other rare earths producer outside China, U.S. company Molycorp, have also agreed to slash the interest on their loan to 2.5 percent from 6 percent.

    At the same time, Mount Kellett has agreed to cut the interest rate on its $225 million in convertible bonds to 1.25 percent from 2.75 percent.

    The deal needs to be cleared by Australia's Foreign Investment Review Board.

    http://www.reuters.com/article/lynas-corp-debtrenegotiation-idUSL4N1CV674
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    Agriculture

    ChemChina ready for concessions to clinch delayed Syngenta deal in 2017: source


    State-owned Chinese chemicals group ChemChina is ready to offer more concessions to win European Union antitrust approval for its $43 billion bid for Swiss pesticide and seed group Syngenta, a source with direct knowledge of the process said.

    Clinching China's biggest-ever foreign acquisition is taking longer than planned amid a flurry of deals in the agriculture sector that Syngenta, the world's biggest pesticides maker, said on Tuesday had swamped competition watchdogs.

    Syngenta expects the transaction to close around the end of March 2017, rather than this year as first planned, but insisted it would go ahead despite increased scrutiny by watchdogs gauging the impact of big deals on farmers and consumers.

    Syngenta’s deal with ChemChina is one of two under EU scrutiny, while another mega deal involving Bayer and Monsanto is expected to land on the regulator’s desk in coming months.

    Bayer and Monsanto have not formally requested EU approval but the European Commission has to consider this deal as well when assessing the ChemChina and Syngenta linkup, and another deal involving DuPont and Dow Chemical, to take into account the changing landscape, said an EU official.

    Syngenta stock plunged more than 9 percent on Monday after a European Commission spokesman said the companies had not offered concessions to get the deal through, raising concerns about the likelihood of a longer, full investigation.

    ChemChina submitted a proposal to the Commission in September, including a plan to divest some $20 million worth of assets from its agrichemical subsidiary Adama Agricultural Solutions, the Beijing-based source told Reuters.

    But the Commission raised "a more detailed menu of possible remedies" last week, said the source, who declined to be identified because he was not authorized to speak to the media.

    ChemChina is ready to cooperate fully with the Commission and come up with a satisfactory solution, the source added.

    A ChemChina spokesman was not immediately available.

    The Commission sometimes opens a full investigation to get a better understanding of complex takeovers, whereby some are eventually cleared with no or minor concessions, though this is probably not the case for ChemChina because of the wave of consolidation moves and the diverse interests involved.

    REGULATORY REVIEW

    Regulatory scrutiny over the ChemChina-Syngenta deal comes as global agricultural chemicals makers bulk up to better compete with each other.

    Dow Chemical and DuPont plan a $130 billion merger, while Bayer aims to buy Monsanto for $66 billion.

    Syngenta Chief Executive Erik Fyrwald told Reuters he expected the EU anti-trust watchdog to take its regulatory review of the ChemChina deal to a second phase once the Oct. 28 deadline for fast-track approval passes.

    "I think it is likely and we are expecting it, but it is not certain," Fyrwald said. "The process was going along and then on Sept. 14 ... the Bayer and Monsanto deal was announced, since then in both the U.S. and the EU there has been a very large escalation in data requests and questions."

    The Commission declined comment.

    Fyrwald dismissed suggestions that the deal could be complicated by a possible merger of ChemChina and Sinochem.

    "We talk to ChemChina regularly on a range of issues ... and they have repeatedly assured us that they are not in any discussions about merging with Sinochem," he said.

    Fyrwald declined to comment on the regulatory impact of the other two big deals in the pipeline. "But I can tell you that the regulators are taking a very close look at everything."

    Syngenta reported third-quarter sales of $2.5 billion, down 3 percent year-on-year at constant exchange rates. The average forecast from analysts polled by Reuters was for sales to ease 0.5 percent.

    Syngenta stock rose 1.8 percent to 404.70 Swiss francs by 0530 ET, still well below the ChemChina offer price of $465 in cash per share plus a 5 Swiss franc special dividend, worth a total of around 467 francs.

    Liberum analysts, who rate Syngenta "buy", valued Syngenta at 357 francs per share should the deal not go through. ChemChina's offer also includes a break fee of $3 billion, or 32 francs per share, for an overall fair value of 389 francs, they wrote in a note.

    http://www.reuters.com/article/us-syngenta-m-a-chemchina-idUSKCN12P186
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    DuPont raises profit forecast, says Dow merger may get delayed


    DuPont raised its full-year adjusted profit forecast as it cuts costs ahead of its merger with Dow Chemical Co (DOW.N), but said the deal may not close by the end of this year as planned.

    Shares of DuPont, which reported a higher-than-expected quarterly profit on lower expenses and higher sales volumes, were marginally lower at $69.81 in morning trading.

    The $130-billion merger of Dow Chemical and DuPont is being scrutinized by regulators world over, with EU antitrust officials expected to decide the deal by Feb. 6.

    "We continue to work constructively with regulators in key jurisdictions to close the merger as soon as possible," Chief Executive Ed Breen said in a statement.

    "In the event that regulators in those jurisdictions use their full allotted time, closing would be expected to occur in the first quarter of 2017."

    DuPont and Dow plan to merge and then break up the combined company into three businesses focused on agriculture, material science and specialty products over 18 months after the deal closes.

    The company, which is looking to cut $1 billion of costs by the end of this year on a run-rate basis, said operating costs declined by $235 million in the three months ended Sept. 30.

    Strict cost control encouraged DuPont to forecast full-year operating earnings of $3.25 per share, higher than its previous estimate of $3.15-$3.20 per share.

    Net sales rose marginally to $4.92 billion in the third quarter, aided by a 3 percent rise in sales volumes, helping the company top analysts' average estimate of $4.87 billion, according to Thomson Reuters I/B/E/S.

    "This reinforces our view that Breen's management is leading to top-line improvement, not just cost-cutting," Bernstein analyst Jonas Oxgaard wrote in a note.

    Revenue in DuPont's performance materials business rose 2.5 percent - accounting for more than 27 percent of the company's total revenue - helped by increased demand in automotive markets.

    Revenue in the agriculture business rose 2.4 percent as higher volumes partially offset lower prices. The unit made up for 23 percent of the company's total revenue.

    Net income attributable to DuPont shareholders slumped to $2 million, or breakeven on a per share basis, in the quarter, from $235 million, or 26 cents per share, a year earlier.

    Excluding a $172 million net charge related to employee severance and asset writedowns, profit from continuing operations was 34 cents per share. That was much higher than the analysts' average estimate of 21 cents per share.

    http://www.reuters.com/article/us-du-pont-results-idUSKCN12P16Y
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    Precious Metals

    Chinese miners in talks for stake in Barrick's Veladero mine - sources


    China's Zijin Mining Group Co Ltd and Shandong Gold Mining Co Ltd have held separate talks with Barrick Gold Corp to buy a 50 percent stake in its Veladero gold mine in Argentina, according to four sources with knowledge of the process.

    Veladero is one of Barrick's five core mines; all are in the Americas. It is expected to produce between 580,000 and 640,000 ounces of gold this year.

    The high quality of the mine, production capacity and the prospect for geographical diversification have appealed to the state-owned Chinese suitors, said three of the sources, who requested anonymity because the matter is private. All spoke over the past week.

    Barrick, the world's biggest gold miner, has not launched a formal sales process for Veladero, and there is no certainty that the talks will result in a transaction, the sources said.

    A potential sale of a 50 percent stake could fetch Barrick more than $1 billion, two of the sources said.

    Barrick's shares rose about 2.6 percent in early trade on higher gold prices, then extended gains after the Reuters report. They climbed as much as 6.7 percent, hitting their highest in more than three weeks and closing up 2.2 percent at C$22.57 in Toronto.

    "It's a sensible thing to reduce risk, and bringing in a deep-pocketed partner can help," said John Stephenson, president of Stephenson & Co Capital Management, who acknowledged that it is very difficult to make a joint venture work "in the best of times".

    "In a tighter operating environment with lower commodity prices, it's important to keep a focus on costs. I think this is a positive move for Barrick," he added.

    Last month, operations at Veladero were shut down for more than two weeks after a cyanide spill at the high-altitude mine. This was the second cyanide spill at the mine in a year.

    The deal would be the latest instance of Chinese companies investing in Latin America's resource-rich commodities sector, partly to help meet domestic demand. Chinese investors have poured billions into Latin American acquisitions in recent years, buying into copper and iron ore miners, oil and gas concessions and power grids.

    Barrick would like the buyer of the Veladero stake also to make an investment in its Pascua-Lama project in South America, two of the sources said.

    The gold and silver project, which straddles the border of Argentina and Chile in the Andes Mountains, was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.

    The Canadian company wants help developing the mineral-rich area it controls, known as the El Indio belt, a 140-kilometer stretch of land home to Veladero and Pascua-Lama. Alturas, another large discovery owned by Barrick, is also on the El Indio belt.

    Last year, Barrick and Zijin, one of China's biggest gold producers, formed a strategic partnership, with Barrick selling a stake in its Papua New Guinean mine to the Chinese company. Zijin officials have visited Pascua-Lama several times, according to local media reports in 2014.

    Barrick has been trimming noncore assets to reduce debt. It has a public process under way in Australia to sell its stake in Kalgoorlie, an Australian gold mining joint venture with Newmont Mining Corp.

    http://www.reuters.com/article/us-barrick-gold-argentina-idUSKCN12P2QD
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    Nano technology could be a game changer for placer mines


    Nano-technology could come to the rescue of ailing gold companies.  A new recovery method using nano-technology promises to improve gold recoveries by upwards of 40%, and in some tests has achieved improvements of an astonishing 90%. For marginal mine operators, this is could clearly be a game changer.

    In August, the technology transitioned from pilot phase to full production at Nevada-based New Gold Recovery (NGR), and is already attracting interest from mining companies around the world. New York-based investment firm Unicore Group has taken a minority share in the company and sees this as one of the most exciting additions to its portfolio.

    UniCore Group’s senior managing partner, Herve Ime, says the expansion possibilities for NGR, given the parlous state of gold mining worldwide, is huge. “We decided to back NGR when it was still in its embryonic phase and the technology had not been commercially applied. The gold mining industry is crying out for something like this. We see this as a killer technology, rather like what Google is to the internet.”

    NGR started production in August 2016, and will ramp up to 2,000 ounces a month by 2017. That makes it a decent mid-level player. Apart from gold, the company will generate revenue by offering its technology on a profit-sharing basis with other producers.

    Given that margins in mining are so small – companies attempt to recover grams on the tonne – a small change in yield results in a large swing in profitability, and this could mean the difference between  life and death for many of the millions of mines, big and small, around the world.

    The developer of the technology is NGR CEO Anastasios Morfopoulos, better known as Tas. He has been working on a system for improving precious metals recoveries for the better part of a decade. It’s long been known that  placer miners are losing almost half of their gold in the traditional recovery process, which relies on mills to separate the gold from the ore and then traps the liberated gold by means of gravity as it is washed down a sluice. But as much as half of the gold ends up in the tailings. These are the tiny particles, generally smaller than 100 microns, that do not respond to gravity-based recovery. Until now, there has been no way for placer miners to trap these particles.

    Hard rock miners are also paying close attention to this ground-breaking development.

    Several years ago Morfopoulos had a Eureka moment when he realised that gold and other precious metals had a natural affinity for certain nano-particles. The precious metals can then be separated from the condensate without use of mercury, cyanide and other hazardous substances generally used in this type of mining, and which are in any event banned in most countries for health reasons.

    The initial results from the Tas 3 technology were promising, showing 40% and even higher recoveries over more traditional methods. Further refinements were made to improve the recovery grades before settling on what is now called Tas 3, the third and latest system evolution. The system is described as the first-ever green and eco-friendly placer mining technology for gold recovery.

    “We decided to use the technology to give us a recovery advantage as a primary producer,” says Morfopoulos. “Our studies show that placer mines lose up to 70% of their gold because they do not have a way to capture the fine gold particles. If we can recover that for them, then I think this is good news for gold mining generally.”

    Originally, the plan was for NGR to licence the technology on a tolling basis to other miners, but it was then decided to go into full-blown mining production using the proprietary technology. Morfopoulos says the technology will be made available to other miners, and says the company is looking for partners in Africa and elsewhere.

    The nano-technology is applied to a series of trays placed on a rack in a zigzag formation, trapping only precious metals as the concentrate flows over the tray formation. The dirt washes off, leaving up to 99% of the gold from the concentrate extracted.

    Hard rock mines, with their sophisticated recovery plants, have much better yields than placer (or alluvial) mines, but even here there is potential for improvement that NGR wants to harness. For the moment, NGR’s focus is on placer mining, but Morfopoulos says he is receiving tailing samples from around the world to see if recovery grades can be improved.

    NGR, through its wholly-owned subsidiary New Gold Nevada (NGN), acquired more than 3,400 acres of land in north-east Nevada, one of the world richest gold and silver producing region with over 50 active mines and annual production of 4.95 million troy ounces of gold and 10.94 million troy ounces of silver in 2014. NGR raised $5m by way of private placement, and brought in UniCore Group as its financial partner. This gave it sufficient capital to acquire the Black Rock Canyon Mine deposit, reckoned to have $480 million worth of gold deposits lying no more than 90 feet below the surface, and refurbish an old processing plant on the site. UniCore is currently exploring the possibility of raising an additional $10 million for expansion of mining operations, which Morfopoulos says will initially focus on high value deposits in the south-west U.S.

    The company recently secured approval from the U.S. Bureau of Land Management to commence mining operations. It also secured a water permit to allow it to establish settling ponds.

    Black Rock Canyon has an indicated resource of 9 69 907 cubic metres averaging 0.6 grammes per cubic metre gold and an inferred resource of 3 344 509 cubic metres of gravel which are estimated to average 0.48-0.72 grammes per cubic metre.

    The Tas 3 prototype was verified and cross-checked by two third-party inspectors: Bureau Veritas Group and Global Mineral Research, world-renowned metallurgical research labs.

    http://www.mineweb.com/regions/usa/nano-technology-could-be-a-game-changer-for-placer-mines/

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    Base Metals

    Miner Freeport-McMoRan cuts sales forecast for 2016


    Diversified U.S. miner Freeport-McMoRan Inc reported a weaker-than-expected quarterly profit and said it expects to sell less gold, copper and molybdenum this year.

    The miner now expects to sell about 4.8 billion pounds of copper and 1.26 million ounces of gold, down from its earlier estimate of 5 billion pounds of copper and 1.7 million ounces of gold.

    Freeport now expects to sell 73 million pounds of molybdenum compared with its earlier forecast of 76 million pounds.

    Like other miners, Freeport has been hit hard in recent years by a downturn in prices for commodities, including copper, gold and oil, at a time when its debt had soared on the back of acquisitions.

    The world's biggest publicly listed copper producer, which had a debt of $19 billion as of Sept. 30, unveiled in July a $1.5 billion share issue to help cut its debt and shift focus from its high-profile asset sales plan.

    Phoenix-based Freeport, which is under pressure from activist investor Carl Icahn, also cut a quarter of jobs in its oil and gas business in April and suspended its dividend in December.

    The company's net income attributable to shareholders was $217 million, or 16 cents per share, in the third quarter ended Sept. 30, compared with a loss of $3.83 billion, or $3.58 per share, a year earlier.

    Excluding items, the company earned 13 cents per share, below analysts' average estimate of 18 cents per share, according to Thomson Reuters I/B/E/S.

    Revenue rose 14.6 percent to $3.88 billion.

    http://www.reuters.com/article/us-freeport-mcmoran-results-idUSKCN12P1KJ
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    Aeon in talks on Century assets, but liabilities a deal-breaker


    Australian base metals miner Aeon Metals said on Wednesday it was interested in parts of MMG Ltd's giant Century zinc mine, but would be unable to shoulder all of the liabilities of the mine that was wound down last year.

    "Aeon is unable to pursue a transaction based on MMG's preferred structure which involves taking on all the assets and liabilities associated with the Century mine and infrastructure," it said in a notice to regulators.

    "Nevertheless, Aeon has made clear to MMG its interest in certain assets of Century."

    Clean up costs at Australia's largest open-cut zinc mine stand at $378 million, nearly 10 times the market capitalisation of Aeon Metal, at A$48.7 million ($37.2 million).

    MMG, the Hong Kong-listed arm of state-owned China Minmetals Corp, had to hike its estimate of closure provisions more than 60 percent just months before shuttering the mine last year as the cost of remediation became clearer.

    The work includes capping and compacting waste dumps, and rehabilitating an evaporation pond and a tailings dam, but doesn't involve filling the open pit, which covers 3.5 square km (1.4 sq miles).

    "We are pleased with the significant interest in the Century mine assets and we will not provide commentary on the parties involved," a spokeswoman for MMG said.

    Major miners have been trying to sidestep hundreds of millions of dollars in closure costs by selling off pits and infrastructure, but the cost of environmental rehabilitation has made it tough to seal deals.

    http://www.reuters.com/article/australia-mines-ma-idUSL4N1CW06H

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    Steel, Iron Ore and Coal

    Shaanxi asks coal mines to increase output for winter supply


    Northwestern China's Shaanxi province asked advanced coal mines to increase production to ensure supply for this winter, showed a notice jointly released by the provincial Development and Reform Commission and provincial Bureau of Coal Mine Safety.

    Except those advanced mines approved by the government, coal mines in Yulin, Yan'an and Xianyang with annual capacity above 1.2 million tonnes adopting fully-mechanized mining and meeting Level I safety standard with no safety accident record in recent three years should make monthly plan for production increase, the notice pointed out.

    Coal mines listed for capacity reduction over 2016-2020, mines ordered to suspend production or halt construction and illegal mines are not allowed to resume production, it said.


    Efforts made by the provincial government in cutting surplus capacity have shown initial effect in the past months. Raw coal output in Shaanxi dropped 9.93% on year to 321 million tonnes in the first nine months.

    By end-September, stocks at coal companies across the province fell 21.43% on year and down 29.9% on month to 2.87 million tonnes.

    The province planned to slash 101 coal mines with capacity of over 47 million tonnes per annum (Mtpa) in 2016-2020, with 18.24 Mtpa to be cut this year.

    http://www.sxcoal.com/news/info?lang=en&id=4548447

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    China's key steel mills daily output gains 1.3pct in early Oct


    Daily crude steel output of China's key steel mills gained 1.28% from ten days ago to 1.74 million tonnes over October 1-10, according to data released by the China Iron and Steel Association (CISA).

    The increase was mainly due to strong demand from end users boosted by the state planner's approval of a bunch of infrastructure construction projects on road, railways, bridges and airports.

    The average daily crude steel output across the country was estimated at 2.29 million tonnes during the same period, rising 0.69% from ten days ago, the CISA said.

    By October 10, stocks of steel products at key steel mills stood at 13.88 million tonnes, up 5.35% from ten days ago, the CISA data showed.

    By October 23, total stocks of major steel products in China slid 3.86% on month to 9.16 million tonnes, the second consecutive drop on weekly basis, which indicated robust demand from downstream sectors.

    http://www.sxcoal.com/news/info?id=4548460&lang=en
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    Ternium near buying ThyssenKrupp's Brazil mill, sources say


     Ternium SA has resumed looking at ThyssenKrupp AG's money-losing Brazilian steel mill CSA Cia Siderúrgica do Atlántico SA for a potential acquisition, months after negotiations failed to gain traction because of legal and environmental issues, three people familiar with the matter said on Tuesday.

    Talks for the acquisition of CSA are in an advanced stage, according to one of the people. While no formal offer for CSA has been made yet, interest from Ternium stemmed from the possibility of using CSA to produce more slabs, whose production is insufficient in Brazil, two of the people said.

    Ternium's Brazilian unit did not have an immediate comment. In a statement, Thyssenkrupp said it sees the future of CSA "outside the company," making it "perfectly normal that we should conduct talks with possible interested parties."

    The news was first reported by Japan's Nikkei newspaper on Tuesday.

    http://www.reuters.com/article/csa-ma-ternium-idUSL1N1CV13E
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